A recurring theme in this blog is the central role travel technology plays in the business model of successful travel companies, particularly enterprise resource planning (ERP) systems designed for the travel industry. There’s a simple explanation for this – Travel ERP has the potential to deliver such a wide array of benefits that it fits into any number of travel topics: reducing operational costs with automation; making better decisions with more accurate reporting; or supporting sales with better travel partner integration, just to name a few.
But raising awareness of the business case for these systems is not enough. The travel industry is complex and filled with a wide range of businesses. It stands to reason the benefits of these systems are dependent upon a good fit between its features and the operational needs of the company. Simply put, a great ERP system can’t overcome a poor selection. So here are tips on how to make a good choice.
Guidelines for a Good Travel ERP Selection
Create an Inclusive Selection Group: all ERP systems have this in common: they integrate essential operations – accounting, inventory, order management, HR, CRM into a complete system to optimize processes and share information across the whole company. Because the system will affect many parts of the business, a selection group must be formed that represents those areas. Further, the members must be well-informed and able to articulate their views. Granted, large groups create organizational overhead and lengthen the decision-making process. But unless selection is based on operational knowledge, the risk of a poor choice is magnified. Even if a good decision is made, marginalizing operational groups in the process will make acceptance of change more difficult.
Make Good Use of IT & Business Owners: software vendors may want to sell software licenses, they also want to sell billing hours of their technical specialists. This makes sense: both vendors and customers want a successful implementation and specialized skillsets play a part. However, purchasing a system without close guidance from the IT department overlooks the important role they play in keeping the billing for those specialists to a minimum. IT management will know if a system’s technology is a good or bad match for their resources. At worst, working with IT will allow for accurate budgeting if the resource match is bad but the system benefits are too good to pass up.
Another reason vendor specialist’s play a role in system implementations is product customization. While Travel ERP systems are typically specialized for industry sectors, company processes are never alike. Accordingly, these systems can only achieve standardized operational processes in one of two ways: either business changes processes to fit the system, or the system is customized to the company’s business processes. Unless the selection group works closely with business owners, it could easily fall into the trap making the assumption those owners will change their processes. If that assumption is wrong, the billing for specialized customization work could make it an expensive mistake.
Well-defined Scope and Realistic Expectations: another reason for an inclusive selection group is their wide range of knowledge will enable the system implementation project to be properly scoped. What that means is the required body of work is well defined, along with the skills and effort necessary to accomplish it. Ask any implementation manager what he fears most and the answer will almost always be, “scope creep” – which happens when new work is discovered after plans have made and the project has begun. There’s generally a direct correlation between the use of assumptions in project planning and scope creep. The better the selection group, the more knowledge and fewer assumptions will go into estimations. Good estimations mean selection will be based on reasonably accurate costs.
Well-defined scope is the anchor for realistic expectations. Realistic expectations play an important part in managing project risk. System implementation projects introduce change into the organization and change inevitably creates some level of resistance. Unrealistic expectations are very destabilizing for any implementation project. Champions of the system decision can become doubtful and uncertain while resistance to the decision can be emboldened.
Emphasize Change Management: a wide body of research points to weak change management procedures as a significant cause of large software project failures. Remarkably, poor communication was the single greatest factor in that weakness: key stakeholder groups were simply not kept informed of imminent changes to their business or operating environments. Kept in the dark, it’s hardly surprising their reaction to these unexpected changes was generally not supportive and cooperative.
Change management issues can be caused by the company’s project management team. They can also be caused by poor management and/or communication by the software vendor. Both groups face challenges in this area: the project management team may be relatively inexperienced with ERP implementations; the vendor may not completely understand the company’s culture or organization. The selection group should request several implementation references and follow up with good questions about a vendor’s change management track record.
Senior Management Champions: Selecting a Travel ERP system is typically a high-visibility initiative, so senior management is almost always involved – or at least aware – in the beginning. However, that early involvement or interest may quickly fade if senior managers begin to view this selection as primarily an IT project or a purely tactical initiative. That’s because senior management is often tasked with making, implementing and overseeing strategic decisions – so anything tactical is outside their role.
However, the benefit of keeping them involved centers on the role of ERP itself. It is an enterprise-wide software system which needs a champion who can credibly speak for the entire organization. During the selection, senior management is uniquely qualified to articulate collective benefits or considerations, something managers of operational units cannot do well. During implementation, having senior manager champions is essential for resolving issues of a collective nature.
The role of senior management brings up one of the major reasons poor ERP selections are made: urgency. While it seems self-evident such a significant decision would be made with careful deliberation, often times that’s not the case. Instead, the decision involves so much investment – not just financially, but also investment in organizational change – that gaining a mandate for it is difficult.
Many organizations, typically without strong senior management articulating a travel technology roadmap, find it easier to delay the decision until tactical considerations overcome resistance. Those could be a sharp decline in profitability, pressure from travel partners or new management. Then the decision is finally made, usually carrying with it a sense of urgency that undermines careful planning and consideration.
These tips began with the recommendation of an inclusive selection group. That is the most important step. It will create a decision-making body of well-informed, experienced individuals – all of whom have a vested interest in making the best selection possible. Further, a well-structured group is far less likely to be swayed by influences such as urgency, impulsiveness and short-sightedness. It is the best insurance for a well-reasoned selection.